Blockbuster Launches DirecTV PPV Service31 May, 2001 By: Joan Villa
Blockbuster Inc. is invading American living rooms without videos.
Customers can use their remote controls to order up a Big Blue pay-per-view movie from the newly rebranded "Blockbuster Ticket only on DirecTV."
Blockbuster execs would not comment on the chain’s share of the fee, but the retailer has a new goal of doubling PPV buy rates in the next two years.
The new service launched June 1 with Space Cowboys and covers DirecTV’s 44 movie choices per day, but also adds another 11 Blockbuster Exclusive titles acquired from film festivals and other venues by its subsidiary, DEJ Productions Inc. The deal excludes DirecTV’s adult fare and special sporting and concert events.
"We do expect the Blockbuster name and their aggressive marketing efforts to drive customers, particularly those customers who haven’t used pay-per-view before or haven’t used it much, to our service," says Robert Mercer, senior manager of communications for DirecTV. "We did some focus group testing on that and of course Blockbuster, as we suspected, proved to be a very recognizable name with high brand awareness, especially for those customers into movies."
The rebranding is an outgrowth of a year-old alliance that put satellite dishes in Blockbuster stores in September and moved more than 100,000 systems out the door by year-end. Without providing an exact number, Blockbuster’s Nick Shepherd, senior v.p. and chief concept officer, says the retailer’s 4,100 company-owned stores have "easily surpassed" the 100,000 mark, selling a "significant number of additional systems" this year alone.
For each system Blockbuster sells, the retailer gets an undisclosed percentage of fees for activation, monthly subscriptions and any PPV movies ordered. The retailer will target two customer types: those who don’t buy PPV because they prefer cable and video; and those whose video viewing has lapsed entirely, Shepherd says.
Although Blockbuster will contribute some new content to the PPV service and launch innovations such as a 2-for-1-price "double feature," the retailer will not participate in DirecTV’s negotiations with the studios either for content or PPV windows, he says.
"The real core is not to change the product but to change the way we market the product and make the whole PPV process more customer-friendly," he says. "It’s telling customers who are likely to buy what product is available and then use the seduction of the brand to feel comfortable" making that purchase.
The launch included a "new look" for the DirecTV service, featuring "a lot of sizzle in terms of graphics and the on-air look," Mercer says. For DirecTV, "the idea is to really attract the customer to the pay-per-view service and show them how easy and convenient it is to order PPV movies."
DirecTV will advertise Blockbuster Ticket in the June issue of Premiere Magazine, and will feature the service on its programming guide and on-air channels to reach 9.8 million customers. Blockbuster will display a special message on in-store monitors and enhance existing DirecTV kiosks with promos. Both will use their Web sites to promote monthly titles and provide scheduling information and Blockbuster’s site will offer a movie search engine.
The DirecTV partnership reflects the reality that Blockbuster expects 6 million of its 48 million customers to purchase satellite dishes by 2005.
Without the DirecTV deal, Blockbuster has estimated that it would lose approximately half of each customer’s $120 annual video rental revenue after a satellite dish purchase. Blockbuster is gambling that non-customers lured back to video rental combined with PPV will generate $275 in annual purchases to Blockbuster, while current video-renting customers will be worth an additional $140 per year.
"Where we were once seeing a diminished business from our customers who purchased a satellite system, we’ll now continue to enjoy a similar revenue stream whether they rent at one of our stores or select pay-per-view," explained c.e.o. John Antioco.